SAGINAW — Retired Saginaw police Officer Daniel P. Kuhn alleges Saginaw firefighters underpaid more than $1 million for pension benefits they’ve received since 1997, and now taxpayers are on the hook.

Kuhn sued the city in December 2009, claiming that after he emailed police union members informing them of the shortfall, superiors retaliated by suspending him and docking his pay. Saginaw Attorney Thomas H. Fancher said Kuhn is confused.

“It’s sort of like stating, ‘They’re trying to punish me because I exposed information that the Earth is really flat,’ ” Fancher said.

Saginaw County Circuit Judge Janet M. Boes is scheduled to rule Sept. 12 on the city’s motion to have the case dismissed, in part on grounds that Kuhn’s whistleblower suit is without merit because it doesn’t allege any criminal activity by the city, Fancher said.

Pending the ruling, a pretrial hearing is scheduled the same day.

Saginaw officials, who have spent $13,199.26 defending the case, according to Fancher, in July rejected a court-ordered case evaluation that would have granted Kuhn a $21,000 settlement, said Rol Jersevic, Kuhn’s Saginaw Township-based attorney.

When asked why the city rejected the evaluation, Fancher said: “I’m not sure we’re allowed to talk about that. ... I’ve never talked with anyone about a case evaluation.”

Kuhn retired from the Saginaw Police Department in February.

He’s the former vice president of the Police Officers Association of Michigan and now works as a business agent for the labor organization.

The whistleblower claim

Kuhn’s suit stems from his accusations that firefighter union members haven’t paid their fair share of pension benefits.

Saginaw fire Engineer Bill McCarthy, the union’s pension board representative, said he is aware of but unfamiliar with the details of Kuhn’s allegation. He declined comment on the matter.

In its 1997-2000 contract, the firefighter union negotiated to have the pension multiplier increased to 2.8 percent from 2.6 percent in exchange for other concessions.

To calculate a pension fund member’s final annual benefit, one multiplies their final average compensation — the mean pay of the member’s three highest grossing years within the last 10 — by their years of service and then the “multiplier,” which is represented as a percentage.

For instance, a 25-year firefighter with a 2.8 percent multiplier, whose final average compensation is $60,000, would earn a $42,000 annual pension, compared with $39,000 annually if the multiplier were 2.6 percent.

When the multiplier changed, an accompanying letter stated “that any increased cost in the city’s contribution to the pension system shall be borne by members of the unit, and there shall be no additional costs to the city.” It added that other concessions, including elimination of the “guaranteed living standard,” negated the extra cost.

Though it’s not stipulated, the statement, which also appears in section 16.12 of the city Code of Ordinances, only applied to the 1997-to-2000 contract, Fancher said.

“Along comes the 2001-to-2004 contract, and they negotiate, and one of the items is the 2.8 multiplier,” Fancher said, “and they hammer out the deal and everything in the prior contract ... isn’t there anymore.”

The 2.8 percent remains in effect today.

The city attorney said the present contract trumps the pension ordinance.

The question of unpaid firefighter obligations arises “every couple” years, Fancher said, “which is one reason I said, ‘This doesn’t apply anymore; let’s get it out of the ordinance book.’ ”

“We’ve got a law,” Jersevic said. “Did that have a sunset provision on it? I didn’t see one. If there is one there that I missed, I will publicly apologize to the city” and Fancher.

When asked to evaluate the multiplier’s financial impact on the pension in October 2005, an actuary wrote that, as of June 30, 2004, the multiplier increase cost the city $443,540.

Jersevic theorizes, if recalculated today, the amount would be closer to $1.2 million.At nearly the same time Kuhn filed his lawsuit, Fancher requested a third party review Kuhn’s allegations. Dennis B. DuBay of Detroit-based Keller Thomas Counselors at Law wrote in a Dec. 4, 2009, letter that the award “certainly does not state that all future changes in perpetuity which cost more” because of the multiplier increase “would be paid by the firefighters.”